A fixed-rate mortgage comes with an interest rate that won't change for the life of your loan. A "conventional" (conforming) mortgage is a loan that conforms to established guidelines for the size of the loan and your financial situation. Conventional mortgages often feature lower interest rates than jumbo loans, FHA loans or VA loans.

Monthly payments on a conventional fixed-rate mortgage remain the same for the life of the loan, making it an attractive option for borrowers who plan to stay in their home for several years. The alternative to the fixed-rate mortgage is the adjustable-rate mortgage(ARM), which features lower monthly payments during the first few years. While many prefer the security of a fixed-rate loan, an ARM may be a better option - especially if you know you'll be moving within the next several years.

The 30-year conventional fixed-rate mortgage has long been popular due to its fixed interest rate and lower monthly payments, however, since the interest payments are spread out over 30 years, you'll pay more interest over the life of the loan than you would on a shorter-term mortgage.

With a shorter loan term and lower interest rate, a 15- or 20-year fixed-rate mortgage can help you pay off your home faster and build equity more quickly, although your monthly payments will be higher than with a 30-year loan. The 15- and 20-year fixed-rate mortgages are especially popular for refinancing.

Benefits and Considerations

With a fixed-rate mortgage, the interest rate won't change for the life of your loan, protecting you from the possibility of rising interest rates.

Conventional mortgages typically offer a lower interest rate and APR than other types of fixed-rate loans.

Conventional mortgages often require less documentation than FHA loans or VA loans, which could speed up the overall processing time.

Conventional fixed-rate mortgages are available for refinancing your existing mortgage, too - and 15- and 20-year options are especially popular.

Requirements and Qualifications

Loan amount - The loan amount for a conforming mortgage is generally limited to $417,000 for a single-family home, though limits may be higher in regions where home prices are higher. Jumbo loans allow you to exceed the conforming loan limit to borrow for a higher-priced home.

Down payment - Most conventional loans will require at least 5 percent (and optimally 20 percent or more) as a down payment. For loans with lower down-payment requirements, explore government-backed mortgages like VA loans and FHA loans.

Credit history - Conventional loans are a good choice for borrowers with excellent credit, which generally means a FICO score of 740 or higher. There are also established guidelines for income and other personal financial information.

Have questions about mortgage loans? Call us at 512-219-8148. It's our job to answer these questions and many others, so we're happy to help!

Examples

Conventional fixed 30 year
On a $150,000 loan for 360 months at 4.25% interest rate, monthly payments would be $737.91. No customer paid closing costs, APR is 4.25%.

Conventional fixed 20 year
On a $150,000 loan for 240 months at 4.125% interest rate, monthly payments would be $918.89. No customer paid closing costs, APR is 4.125%.

Conventional fixed 15 year
On a $150,000 loan for 180 months at 3.50% interest rate, monthly payments would be $1,072.33. No customer paid closing costs, APR is 3.50%.

Conventional fixed 10 year
On a $150,000 loan for 120 months at 3.25% interest rate, monthly payments would be $1,465.79. No customer paid closing costs, APR is 3.25%.

All payment examples above do not include amounts for taxes and insurance premiums. The monthly payment obligation will be greater if taxes and insurance are included and an initial customer deposit may be required if an escrow account for these items is established.

Equal Housing Lender

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice.

The rates shown above are the sample rates for the purchase of a single-family primary residence based on a 60-day lock period. These rates are not guaranteed and are subject to change. This is not a credit decision or a commitment to lend. Your guaranteed rate will depend on various factors including loan product, loan size, credit profile, property value, geographic location, occupancy and other factors.

To guarantee a rate, you must submit an application to Austin First Mortgage and receive written confirmation from a mortgage loan originator that your rate is locked. Application can be made online.

Conforming Fixed-Rate Loans - APR calculation assumes a $150,000 loan with a 20% down payment and borrower-paid finance charges of 0.862% of the loan amount, plus origination fees if applicable. If the down payment is less than 20%, mortgage insurance may be required, which could increase the monthly payment and the APR. Conforming rates are for loan amounts not exceeding $417,000 in the states we serve.